Strategic Alignment of an R&D Portfolio by Crafting the Set of Buckets

The strategic buckets method is often posited as an approach to ensure the strategic alignment of an research and development (R&D) portfolio with firm's strategy. Despite its popularity, crafting the right set of buckets to allocate resources is not a straightforward task. We consider the question of how to establish a set of buckets that aligns the R&D portfolio with the business strategy. We carried out a case-based research and investigate seven companies in order to propose a framework to assist decision makers in designing this set of buckets. Our framework is composed of four strategic constructs, namely, technology, market, capabilities, and organizational processes. In addition to these four constructs, we suggest that the external environment also be taken into account. We discuss the key benefits and offer theoretical insights concerning the strategic constructs, which can be combined and divided, resulting in a set of buckets that better suits a company's strategy. In addition, we acknowledge the idiosyncratic nature of firms and, as opposed to prescribing a static approach for companies, we suggest the design of buckets as a dynamic process to be performed according to the four different constructs, together with a firm's interaction with the external environment. We close by discussing the implications of our approach.